Draft Equality Act 2010 (Gender Pay Gap Information) Regulations 2017

Lord Coaker Excerpts

Wednesday 25th January 2017 General Committees

[Sarah Champion]

I thank both my hon. Friends for their interventions. That is the problem—even if section 20 of the 2006 Act could be interpreted as extending to a breach of the regulations, it appears that the EHRC does not believe it can enforce that.

[Vernon Coaker (Gedling) (Lab)]

What my hon. Friend rightly says is compounded by the fact that although the Government have included a regulation allowing them to review the operation of the regulations and whether their objectives have been achieved, that review could be up to five years away. We need to encourage the Government to make that review quickly, to see whether the concerns we are raising have come to pass.

[Sarah Champion]

I thank my hon. Friend, and I look forward to hearing what the Minister has to say on that specific point.

In the November 2015 autumn statement, the Government imposed a 25% cut to the EHRC’s budget. That followed a whopping—I am not sure whether that is a Parliamentary expression—69% funding cut since the beginning of the coalition Government, and has led to the budget being reduced from £70 million to £22 million. How does the Minister expect the EHRC to fulfil its enforcement duty? Do the Government plan to legislate to provide the EHRC with the powers it needs to enforce the regulations? Does she plan to provide the EHRC with extra, vital funding? If not, given what my hon. Friends have said, how will she ensure that the regulations are meaningfully enforced?

The Government have stated that they will run checks to assess non-compliance, but details on the Government website to which employers must upload their information have not yet been released. Can the Minister tell us today when those details will be released? Will the Government compile a public database of compliant employers? They have said that they will publish tables, by sector, of employers reporting gender pay gaps. Will they go further and publish an annual league table, ranking every company and public body by pay gap? Will they ensure that companies tackling or seeking to tackle the issue are rewarded with good publicity, for example?

The question of how the Government plan to use the data is key if we are to be assured that they have a strategy to address the chronic and pervasive factors that have led to the significant gender pay gap. Will they commit to bringing a report to Parliament annually rather than every five years, as has been recommended? That report should include broad data on responses, the EHRC analysis of those responses and—this is of fundamental importance—a Government action plan to narrow the gap in the following 12 months. Will the Government also publish their pay gap figures by Whitehall Department? I have not spoken to my Chief Whip about this, but perhaps the Minister will comment on whether political parties should publish their gender pay gaps.

Finally, will the Minister confirm that she has plans to publish a strategy to tackle the gender pay gap in small and medium-sized employers? How does she plan to assess that problem? The regulations will cover 10.47 million employees in the UK, so what she is doing today is hugely welcome, but those employees represent only 40% of employment.

The Government have been forced to implement the regulations, seven years later than required. They have watered them down to the extent that I have to question their commitment to tackling the gender pay gap, although I do not question the Minister’s commitment to that. Ahead of the spring statement, the Government should outline how they plan to tackle the wider issue of the economic inequality of women, rather than take away the teeth of the enforcement agency. They have refused, year after year, to conduct a cumulative gender impact analysis of their policies. Instead of bringing forward their own documentation, I am sorry to say that they chose to smear the research of the House of Commons Library and the women’s sector.

Almost every major piece of legislation that has improved the lives of working women has been introduced by a Labour Government, and all Opposition Members are proud of that. All the Government had to do on the mandatory reporting of the gender pay gap was bring the legislation into force and create a meaningful mechanism for tackling pay inequality. Unless the Minister can give us assurances today, I am sad to say that they might have failed on that.

[Vernon Coaker]

It is a pleasure to serve under your chairmanship, Sir David. It is a few years since I have been on one of these Committees, but I was keen to serve on it because it is important for me as a man to say how important the regulations are. Although they are about the gender pay gap, the issue concerns us all.

The situation is simply not good enough. Men should be demanding equal treatment for women and the closure of the pay gap as loudly as many of my colleagues have done, particularly my right hon. and learned Friend the Member for Camberwell and Peckham, who has campaigned on these issues for decades, including when the attitudes she was facing were even more difficult than they are today. We should recognise women who have done that throughout the ages, wherever they have come from. We would not have reached this point were it not for many women like my right hon. and learned Friend. She is here today, and she remains an influence.

It is important for us to lay out the fact that the pay gap, despite numerous attempts and numerous pieces of legislation, remains at 18.1%. For full-time equivalent roles, it is 9.4%. In my region, the east midlands, it is 12%, and that simply is not good enough. More urgency has to be injected into this issue to try to move things forward. Otherwise, there will be a Committee like this one in 10 years’ time berating the fact that whoever is in government at that time is presiding over a gender gap that is 8.9% instead of 9.4%. We have to do better, and the challenge is not just for Government but for all of us to demand better.

My hon. Friend the Member for Rotherham asked an important question, and I reiterate it to the Minister. These pay gap regulations will affect larger private companies, but what exactly do the Government intend to do? What will the timescale be for reporting by Government Departments and larger public bodies? Given the number of people they employ, it would be interesting to hear about that.

[Melanie Onn (Great Grimsby) (Lab)]

I wonder whether any consideration has been given to different-sized employers. Women who work for a larger employer might have their pay gap monitored, but if they work for a smaller employer doing exactly the same job, they will not be monitored. Those will be people doing exactly the same job and still experiencing significant levels of inequality. Does my hon. Friend see that as an issue?

[Vernon Coaker]

That is a real issue. The Minister will be able to confirm this, but I think I am right in saying that the regulations will affect 34% of women. That will obviously leave a significant number of women outside the scope of the regulations, who might include some of the women my hon. Friend refers to.

People moving in and out of companies, going from one employing more than 250 to another that does not, is a real issue. I will come back in a couple of minutes—I do not want to speak for too long—to the review mechanism that the Government have built into the regulations. They should consider that point.

I want to draw the Committee’s attention to the fact that some of the issues we are discussing might be cultural problems. It is difficult to argue that we should change the culture by changing the law, but the law can be a signpost to the sort of cultural attitudes we wish to encourage. I am not saying that we should pass a law on this, but CHILDWISE published a report today about discrimination in pocket money. I confess an interest— I will need to check with my family, who are grown up now, to ensure that this did not happen for them. Apparently the gender pay gap begins early in childhood and at home, with boys receiving 20% more pocket money than girls. I hope I did not do that, but I cannot say I definitely did not. It would completely undermine what I am saying now.

The new report from CHILDWISE reveals that between the ages of 11 and 16 the gap grows to 30%, which mirrors what happens in the adult population, where the gender pay gap rises as women get older. Between those ages boys receive an average weekly income of £17.80, and girls of the same age lag behind on £12.50. I do not know how accurate those figures are; I am just quoting them. I do not think I gave my son £17.80—maybe a month, but not a week.

The serious point I am trying to make is that the cultural attitudes in our society are what we need to address, think about and challenge, but the law is a good place to start. I take my hon. Friend the Member for Rotherham’s point that these regulations come seven years after the primary legislation, but the Government did try a voluntary approach. The explanatory memorandum shows the failure—not a catastrophic failure, but a very real one—of the voluntary approach. We are told on page 2 of the explanatory memorandum that according to the ONS:

“Whilst over 300 organisations signed up to this initiative, we are aware of only around 11 of those that have voluntarily published gender pay information.”

That initiative was set up in 2011, so the necessity of the regulations cannot be overestimated.

[Julie Elliott]

Does my hon. Friend agree that voluntary measures in these areas of employment law never work? That is why transparency is important, but it is essential that action follows from it to make it work and to make the average gender pay gap disappear. Is he as interested as I am to see which Departments the Minister thinks will be the worst when their transparency is revealed? Will they be the high-pay, high-value Departments rather than the smaller, more niche Departments?

[Vernon Coaker]

I am interested in that, and it takes me to my next point. Legislation is crucial, and to be fair, with our support, the Government have brought it forward. We can argue about whether it should have come sooner, but we support it. The lack of enforcement is a problem, though, and I am disappointed about it. The Government recognise that there may be an issue with enforcement, because a review mechanism is included in regulation 16. They say they will carry out a review of the regulations and publish a report, which must look at whether the objectives have been achieved and so on. However, that report must be produced before the end of a “period of five years.”

The Minister may want to address this point in her closing remarks, but does she really think that we ought to wait five years before we see whether we are achieving our objectives, or does she believe, as I do, that five years is too long? We should say today that, although the regulations specify five years, we will look at the first published results and see whether something needs to be changed. Certainly after the publication of two sets of results it will be clear whether the objectives have been reached. It is important that she addresses that point.

May I say that it is a privilege to speak in a debate such as this? I do not mean this in any way as a flippant remark, but it is really important that men speak in these debates and demand better treatment of women and their rights, not just as something we ought to give them but as something that they should have as of right. That is important, and I know that colleagues on the Committee will have no issue with that.

I say this as a criticism of my own gender: we should be louder in speaking up on these issues. I will not digress from the subject the Committee is considering, but on domestic violence, sexual violence and other such issues, men should be louder in demanding the proper treatment and the proper rights for women in our society.

I thought it was good—other people may disagree—that there were an estimated 20,000 men on the “Women Against Trump” march in London at the weekend. I am sure there were many in other cities, too, and I think it was a good thing.

[Hannah Bardell (Livingston) (SNP)]

It is a pleasure to serve under your chairmanship, Sir David, and I congratulate the hon. Gentleman on a passionate speech. I was on that march, and I marched alongside many men. I have to draw his attention to one particular placard that struck me, which read, “Men of quality do not fear equality”. Does he agree that that is a statement that all men should operate under?

[Vernon Coaker]

Men of quality do not fear equality—of course, I absolutely agree. It should not be a rare occurrence that I and other men turn up and speak in debates such as this. We should be make continual demands to support women across the country—and across parties—in trying to achieve more.

Labour has a proud record in trying to tackle inequality and promoting women’s rights; my hon. Friend the Member for Rotherham drew attention to some of our achievements. We recognise that the regulations are an important step forward and we are pleased that the Government have finally come forward with them, but we will continue to highlight the issue and demand better for women in society.

I point out to the Minister something that I found interesting. When the House of Commons Library assessed and analysed the impact of savings to the Treasury over the past few years, it found that 86% of the impact of tax and benefit changes had been on women. Whatever the rights and wrongs of austerity and the economic policies that the Government are pursuing, that cannot be right. I say to the Minister, given her wider ministerial responsibilities, that that is not a political point; it is just a point that women in general—and men such as myself who support what women are campaigning for and trying to achieve—would say needs to be made.

Finally, I say to the Government that we are pleased that the regulations are being introduced. I am pleased about it as a man and as a member of a modern society. However, we must all try to inject a bit more urgency into this process, so that we are not here in a few years’ time debating why the pay gap has only gone down by half a percentage point rather than being eliminated, as it really should be.

--- Later in debate ---

[Caroline Dinenage]

I have to disagree, given that the last thing businesses need is unwieldy bureaucracy from a nosey, over-centralised, self-serving, self-satisfied Government. I speak as someone who, for 20 years, ran a business that had just under 20 employees. We were crippled by much of the legislation that came from the Labour Government. The bureaucracy and paperwork that I had to deal with on a daily basis, on all manner of things, became a real burden on my ability to employ people and create wealth and prosperity for this country. I therefore take increasing the burden of legislation on businesses seriously. If it is unnecessary, I am not prepared to do it, but we will keep the matter under review.

The regulations require employers to publish the relevant information on their own website in a manner accessible to employees and the public. Hon. Members have asked how it will be displayed, saying that it should not be squirreled away somewhere. The information will have to be accessible. All employers within the scope of the provisions will be expected to publish the required information annually, and no exemptions are envisaged. A written statement signed by a director or senior employee must also be published online. As well as confirming the accuracy of the required information, that will ensure that business leaders take ownership of tackling any identified gender pay gaps. We will also require the information to be published on a Government website.

[Vernon Coaker]

Just to be clear, because one or two of us are not sure—that may be our fault—does what the Minister has said today mean that the first time there will be publication relating to transparency on the gender pay gap will be 5 April 2018?

[Caroline Dinenage]

Yes; companies have to start collecting the data from April this year and publishing the information by April next year. That fully conforms to our manifesto commitment, which was for three years of publications before the next general election.

The Opposition spokeswoman raised the issue of the EHRC not having the necessary legal powers. We are clear that the EHRC does have them, as it has recognised. It may issue an unlawful act notice to any person who has committed an unlawful act, such as non-compliance with the regulations. The notice could include recommendations for an action plan to address the unlawful act and to ensure that it does not continue. As well as investigating whether a person has complied with an unlawful act notice, the EHRC may apply for a court order requiring them to take specified steps to comply with the notice. The EHRC has received, and will continue to receive, sufficient funds to be able to fulfil its statutory duties, of which this is one. It is for the EHRC as an independent body to determine the allocation of its overall funding across specific functions. We believe that the £20.4 million of taxpayers’ money that it receives is sufficient for it to carry out these important duties.

The regulations do not create any additional civil or criminal penalties, and failure to comply would be an unlawful act, as I said. Many consultation respondents felt that disproportionate sanctions would defeat the object of ensuring that a sufficient number of employers take direct responsibility for promoting gender equality in their workforce. We feel that competition in sectors, as well as the risk of brand and reputational damage, will drive compliance. Many employers will see this as an opportunity to put proactive strategies in place to tackle the barriers facing their female employees. Consultation responses highlighted that that approach should have much more of an impact, in terms of making a positive change, than a box-ticking exercise to avoid financial penalties would. Relying on fixed penalties from the outset could encourage some employers simply to pay fines rather than to undertake the necessary pay analysis and do the donkey work involved in making the proposals work.

Crucially, during a roundtable with women’s civil society and trade unions, there was broad agreement that compliance measures should not be so harsh that they risk incentivising employers to subcontract female employees. That is not only about being a friend of business, but because it is so important for women. Rather than just creating a low gender pay gap, we want to create the right type of low gender pay gap. Some industries—indeed, some countries—with low gender pay gaps have very low rates of female employment. That is not because they have a lot of women in high-paid jobs, but because they do not have women in work at all. That shows low workforce participation and high social inequality. The launch of the Government website allowing employers to publish the required gender pay gap information will coincide with the commencement of the regulations, which will allow us to monitor levels of compliance closely. So we will not just be looking at the data once every five years; we will monitor it.

[Vernon Coaker]

May I suggest to the Minister that the first time it is published on the Government website, she makes a written or oral statement, to signify to everyone how important this is, and to get it out there with a bit of urgency and excitement about it?

[Caroline Dinenage]

I cannot imagine anyone would need to encourage a politician to seek publicity. Of course, I will shout it from the rooftops if it will make the hon. Gentleman happy. We will keep our position on financial penalties under review, in the light of employers’ willingness to comply with the reporting requirements during the early years of implementation. The public will be able to search the Government’s website to check whether employers in the scope of the regulations have complied with them and to compare them with other employers in the same sector. We will consider the most effective way to present the published information, in discussion with a wide range of stakeholders.

The hon. Gentleman asked about the scope of the regulations. We calculate that they will affect about 8,000 employers, who between them have more than 11 million employees. An estimated 3.8 million employees will also be covered by separate gender pay gap regulations that will apply to public authorities. In total, the new gender pay gap regulations will cover nearly half of the total workforce.

I agree that we need to challenge gender stereotypes, from the division of unpaid work to the types of occupations that men and women pursue. The Government are looking really closely at that. The hon. Gentleman hit the nail on the head when he said that men need to act as agents of change. Men can be the most powerful agents of change. That is why the Government set up the Women’s Business Council, which has recently expanded to include more men. One of its key work strands is about men as agents of change, and it is about to issue awards recognising men who do fantastic work promoting women in the workplace across the UK.

On SME reporting, I have already spoken a lot about how it could impose too much of a burden on small businesses. At the moment, large employers alone are being required to report, but we will encourage small employers to analyse their pay data and take action where issues occur. I also think that, through the supply chains of big businesses, this will filter down to smaller companies anyway.

The regulations covering the public sector, including Government Departments, were laid last week, and public bodies will be required to publish gender pay gaps every year. The gender pay gap of the Department for Education in 2016 was 5.9%, I am pleased to say.

[Vernon Coaker]

I am sorry to keep asking questions, but is that timetable for public bodies the same as for private bodies?

[Caroline Dinenage]

Yes, it is exactly the same.

The female employment rate is currently the joint highest on record, at 69.8%. The female participation rate has increased by more since 2010 than during the three previous Parliaments combined. We agree, of course, that there is a wider gap for older women, as the hon. Member for Feltham and Heston described. That can be explained in part by age, but not completely. That is why we have introduced measures such as extended flexible working, shared parental leave and increased hours of paid-for childcare—working couples can expect 30 hours from September.

We are not requiring gender pay gap reporting by age, as workforce demographics vary significantly. Such reporting could also raise confidentiality issues, if a company had only a small number of employees in one age bracket. That was raised with us as a concern, and we do not want to betray anybody’s confidence. We agree that the data need to be owned across organisations, which is why we will require a senior director to sign off the data. We will closely monitor compliance on that.

I was asked about devolved approaches. Section 78 regulations cover England, Scotland and Wales. Scottish and Welsh public bodies are subject to their own specific duties in regulations under section 153 of the Equality Act, but the Equality and Human Rights Commission works across England, Scotland and Wales.